Greg Burke is an Opus Dei numerary. Even if his career was not carried out under the Opus Dei umbrella, it is also true that Opus Dei has always been very attentive to institutional communications. For a long time, the director of the Holy See Press Office was Joaquin Navarro Valls, an Opus Dei numerary. And, thanks to Navarro Valls’ presence and experience, Opus Dei soon realized that teaching institutional communications to the Church is a must nowadays. The only dissertation paper about the vaticanisti – the journalists specialized in covering the Vatican – came out from the Holy Cross Pontifical University, the Opus Dei University in Rome. And so it was almost logic – even given the good relationships between Georg Gaenswein, secretary of the Pope, and Opus Dei, whose university had Gaenswein as a teacher – to look to Opus Dei to find a solution for the «communication crisis» of the Holy See. It is not by lobbying, but by necessity that Greg Burke, who recently became an Italian citizen and whose native language is English – a much needed value added, since aggressive articles on the Church are often written in English – has been identified as the right person to become the media advisor of the Vatican Secretariat of State.

That something has changed in the Holy See communication strategy is evident. Often, Benedict XVI has personally taken the lead in addressing a situation. We just need to look at how the Vatileaks case was managed, the week following the arrest of Paolo Gabriele, the Pope’s Butler. The statements marking a clear change in the Holy See’s communication strategy followed each other in a crescendo: first, on Tuesday, May 29 morning, Federico Lombardi, director of the Holy See Press Office, asked journalists not to allow themselves to be manipulated, since many of the stories that had been published in the newspapers fell «outside reality»; on Tuesday, May 29 afternoon,  Angelo Becciu – substitute (deputy) to the Secretary of State – gave an interview to the Holy See  newspaper L’Osservatore Romano, asking journalists to reach «a higher moral standard», and criticizing partisan narratives of events; finally, on Wednesday, May 30 morning, for the first time, the Pope talked openly and clearly about the Vatileaks scandal, renewing his trust on his closest collaborators.

It was not the only change. After Paolo Gabriele’s arrest, Lombardi gave a press briefing almost daily, providing updates and setting the record straight on false stories circulating in the media. And there was more. After the IOR (the Vatican’s financial body) board of Superintendence’s no confidence vote on the board’s president, Ettore Gotti Tedeschi, the memorandum of the meeting when the vote took place was “institutionally” leaked to the press. The IOR has maintained, for some time now, an open door policy, allowing an inside look of its work. Not long  ago, a group of ambassadors accredited to the Holy See were invited to a briefing in the Torrione Niccolò V – the IOR’s headquarters – where Paolo Cipriani, general manager, talked about transparency and the activities of the Institute. Last week, it was the turn for a selected group journalists. Standing before them, Cipriani not only outlined the activities of the Institute, but also gave an in-depth explanation about the seizure of 23 million euro transferred by the IOR from an IOR account to Credito Artigiano in 2009 and to the closing of an IOR account in a  JP Morgan branch in Milan in 2012. Cipriani also denied there was a lack of cooperation with the Italian authorities, showing a letter of the Italian police where they thanked the IOR for the speed and precision of responses to their questions – Mondayvatican had already reported about this letter some postings ago.

Even though many inside and outside the Vatican are contemptuous, Benedict XVI is moving on his path toward transparency. This Pope was not afraid to write an open letter to the bishops in the midst of the Williamson affair; to write a letter to the Catholics of Ireland in the midst of the pedophilia scandal; to personally meet the victims of priest abuses, whenever he went to visit a country where there were victims who asked for a meeting; and to start a purification process within the Church that is perhaps poorly explained, though it is true and alive.  Here, the contrast with the “Communication machine” of Joaquin Navarro Valls is most evident. In his more than twenty years as the head of the press office, Navarro proved himself to be much more than a simple means of communication. He was a spin doctor, an editor, a PR man, an investigator, an advisor, a diplomat and an ambassador for the pope.

Is yet to be seen if Greg Burke will be able to have Navarro Valls’ relation with, and influence over, the Papal apartment. Surely, working within the Secretariat of State, he will be closer to the power center, and he will should be in a good position to elaborate communication strategies. Will he be in charge of an information office of the Secretariat of State or will he just be an official inside the Apostolic Palace? And what will be the future of the Holy See Press Office? Will the appointment of Greg Burke change its role?

Some insiders predict that the Holy See Press Office will become a sort of “base”, to put into effect Burke’s strategies. The next step could be to link the Press Office to the Pontifical Council of Social Communication. This would lead to more strict accreditation norms and to a new role for the director of the Press Office: the role of a simple spokesperson.

Though his appointment has still not been officially announced (and it will probably not be, since it is just the hiring of an employee joining the Curia), Burke has already given some interviews about his new charge. Burke wants first of all to listen, think and understand what has failed in Vatican communications. From the Regensburg speech to the Vatileaks, passing through the Williamson affair and the annus horribilis (horrible year) of the pedophilia scandals (it was 2010), the institutional communications of the Holy See was always playing catch-up with the news. Now, they want to address the stories as they hit the news.

Lombardi did not succeed in keeping apace with the news, in part because he lacked the privileged relationship his predecessor had with the Papal apartment. It will surely be a hard challenge. Greg Burke loves to compare his post with that of the «media advisor» of the White House. The Holy See, however, is not the White House, and the Apostolic Palace is not the West Wing. There is a very different storyline to tell, deeply anchored in a Church that is 2000 years old. A Church that still seems unable to communicate everything that it stands for and does. For example, the most interesting part of the journalists’ visit to the IOR was when the general manager, Cipriani, spoke about his trips to personally see “the works of religion” all over the world: «I recently went to Peru – he said – and I found priests that were taking care of people in shanty towns made of mud. The Church does wonderful things all over the world, and to see what the Institute funds help to achieve gave me a better sense of my own job». This part of the story was not covered in the media. That is why Greg Burke’s has such a formidable challenge before him.

After the no confidence vote. The words of Gotti Tedeschi

After receiving a no confidence vote by the IOR Board of Superintendence, Ettore Gotti Tedeschi became part of the investigation on the Italian defense company Finmeccanica. He is not charged with any crime, but he is suspected to have stored documents of Finmeccanica CEO Fernando Orsi. As Gotti Tedeschi, Orsi hails from Piacenza. They are long-time friends. That is why Gotti Tedeschi’s house in Piacenza and his office in Milan were searched. The police took 47 folders, that are said to contain Gotti Tedeschi’s private documents – and not IOR correspondence. These folders are now in the hands of the Public Prosecutor of Naples investigating Finmenccanica. The Public Prosecutor of Naples sent to the Public Prosecutor of Rome some of the documents. The Public Prosecutor of Rome is still investigating 23 million euro transferred by the IOR in September 2010 (20 million were transferred from a IOR account to a branch of Credito Artigiano and 3 million from a IOR account to Banco del Fucino toward a IOR account to a JpMorgan branch in Frankfurt). Gotti Tedeschi has been questioned by both Public Prosecutors. On the one hand – according to the press – he said he wanted to be discreet and not to speak about the IOR in order not to cause pain to the Pope (he insistently has asked for a private audience with Benedict XVI); on the other hand, he reportedly said that there had been opposition to him for his commitment to transparency, his desire not to have any more cipher accounts in the IOR, and his work to add the IOR to the list of virtuous banks compiled and monitored by the Bank of Italy.  On this, he would have had the collaboration of Anna Maria Tarantola, then number two of the vigilance in the Bank of Italy and now general manager-elect of Italy’s public broadcaster, RAI Television.

IOR transparency

These allegations  are a strong blow to the IOR image. But they are not true. One telling conversation – that is in some ways confirmed from what Paolo Cipriani, IOR general manager, recently told in an interview – even if no one will ever officially confirm it, offers insights.  When Ettore Gotti Tedeschi was still the president of the Institute, Paolo Cipriani, the IOR general manager, asked Gotti Tedeschi to show him where the cipher accounts were, since Tedeschi had been repeatedly calling for their closing. Gotti Tedeschi, angry, did not want to identify which accounts he was talking about and said: «There are such accounts, the Bank of Italy told me about them». Cipriani explained the IOR security and transparency procedures in an interview to the Italian newspaper Corriere della Sera. The policy of the Institute changed in 2002, when the KYC procedures was first and scrupulously applied. KYC stands for «know your customer», and involves a thorough screening of customers.

The IOR has always maintained informal but close cooperation with the Guardia di Finanza, i.e. the Italian financial police. The cooperation is so strong that it is told that Paolo Cipriani once got a letter from the Guardia di Finanza, thanking him for the expediency and the precision of his information in response whenever Guardia de Finanza asked for anything. This was a relationship based on trust.  But the handling of the IOR. account at the JP Morgan branch in Milan did not follow this pattern.

The news of the closing of the account was made public the day after the press release of the second on-site visit to the Vatican of the MONEYVAL advisors. The press release acknowledged the steps forward taken by the Holy See.

Il Sole24Ore – the Italian newspaper that spread the news – claimed that the account was closed because the IOR was «unable to answer» requests for further information regarding some payments of the account to the branch of Milan – a peculiar account, which balance was brought to zero at the end of every day. JPMorgan also recalled that the bank activities of the branch are subject «both to the law of the Italian State and to internal regulations». That is why – after looking atthe IOR needs and the requirements imposed by Italian law and bank regulations – JPMorgan reportedly did not think it had enough information to offer pay and cash services to the 1365 account. However, in fact, it was the IOR that closed the account. The decision to close it was in part also a response to the way in which Italian magistrates had asked for information about the account.

FIUs’ – Financial Intelligence Units –purpose is the exchange of internal information. When there is suspicion of money laundering, the bank alerts the vigilance of the Central Bank, which then alerts its financial intelligence unit. The alerts are kept anonymous, to protect the way that the systemprevents money laundering. These parameters are designed by the Egmont Group of Financial Intelligence Units, a «working group» of FIUs to improve cooperation in combating money laundering and the financing of terrorism, and to help develop each State’s programs against money laundering.

The confidentiality of information is a key element in efforts to combat money laundering, as is also stated in Italy in the law 231/2007, that deals with the competences of the Bank of Italy. Art. 6 of the law says that «the FIU carries its functions with full autonomy and independence. To implement these principles, the Bank of Italy regulates the organization and the functioning of the FIU, including the confidentiality of the information collected. The Bank of Italy provides the FIU with financial means and other adequate resources to insure the efficient pursuit of its institutional goals».

In the case of the closing of the JPMorgan account, none of the standard procedures were followed: the Rome’s Public Prosecutor directly alerted the FIU of the Bank of Italy; the FIU then alerted the vigilance of the Bank of Italy; and the vigilance asked the JPMorgan branch information on the account. But, if the public prosecutors want to investigate an account, they must do it through the Guardia di Finaza. Yet, Ettore Gotti Tedeschi maintained that there were valid reasons why  JPMorgan closed the IOR account of its Milan branch. Gotti Tedeschi’s lack of initiative to defend the Institute was noticed by the IOR Board of Superintendence in the now famous meeting of May, 24, when the board passed the no confidence resolution on its president.

The 24 May board of Superintendence

Usually, the meeting of the Council of Superintendence – called on trimestral basis – are divided in two parts: during the first part – that lasts about half an hour – the members of the Board meet; only after – and this is the second part – Paolo Cipriani, general manager of the Institute, enters, and reports on technical aspects and bank operations of the previous semester.

On May 24, Cipriani had to wait two and a half hours. When he was called by the board, Ettore Gotti Tedeschi had already left the meeting, and the no confidence vote had already taken place. The memorandum was already drafted by Carl A. Anderson, who was the secretary of the Board.

Gotti Tedeschi – as written in the memorandum – began the meeting, and spoke for about 70 minutes. After his speech, the members of the board raised some issues. They remarked to the president his unjustified absence to the last two scheduled meetings of the board (on February, 24 and April, 17). The absence to the last meeting was very disappointing: it was the meeting when the board approved the balances and the earnings to be allocated to the Pope. The IOR, in fact, is not a bank, and its fund are at the Papal disposal. Rumors says that Gotti Tedeschi was in Rome, and he was invited to join the meeting. He did not go.

The board also raised with Gotti Tedeschi news leaks. Among the several documents of the institute leaked to the press in the previous months, there was an e-mail sent by Francesco De Pasquale (general manager of the Authority for Financial Information, so formally a controller) to Ettore Gotti Tedeschi (formally, one of the ones controlled) that complained about the ramifications of the Vatican anti-money laundering law – the law n. 127.  The law had been amended as per MONEYVAL recommendations, and this had sparked a lively debate inside the Vatican.   The e-mail – the members of the board noticed – could have only been leaked by Ettore Gotti Tedeschi’s office.

Last key issue, the closing of the JPMorgan account: why did the president not defend the Institute from the attacks and the inaccuracies of the press? It was then that Gotti Tedeschi, angry, abandoned the meeting. It was – for the members of the board – the climax of a tense and overdue situation. In order to manage thecontroversy,it was decided to publicly release the memorandum of the meeting.

On May, 25 – the day after the no confidence motion– the IOR Commission of Cardinals was convoked to decide how to manage the new situation. Only Card. Odilo Scherer could not be part of the meeting, while Card. Telesphore Toppo arrived right in time from India. In that meeting, the cardinals decided how would Gotti Tedeschi be let go from the institute.

What will follow

While awaiting how the investigation would proceed, and as soon as the news of the «memorandum» of Gotti Tedeschi spread, the Holy See released a press communiqué in which it maintained that it trusted that «the prerogatives acknowledged to the Holy See by the international legal order are being adequately considered and respected by the Italian judicial authorities». It is a clear statement: the Holy See reminds all that those are documents from a sovereign country, seized from an ex president of a «body of State».

To think that this would be of detriment to the evaluation of the Holy See Transparency by the Council of Europe would be wrong. It seems MONEYVAL evaluated the IOR «largely compliant» with international standards.  It was just part of the evaluation. The evaluation is not just about the IOR.  It includes the 120 Vatican bodies that deals with budgets and financial transfers.

Holy See financial transparency. Risks and procedures.

It is worth to clarify some assertions made in the last few days. These assertions had partially come out from the same environment that defended Ettore Gotti Tedeschi. They claim that the Holy See risks not to be added to the white list of the virtuous States in terms of prevention of money laundering; the Holy See has been selected to undergo MONEYVAL inspections; and that the Holy See does not want to cooperate with Italian authorities. But these statements are false or grossly inaccurate. It is thus worthwhile to be  very thorough, and explain everything step by step.

White list

Let us begin with the so-called «white list» issue. MONEYVAL – the body of the Council of Europe that evaluates the adherence to the anti-money laundering norms of Council of Europe State members – does not have a white list. MONEYVAL is a body where peer-to-peer evaluations of member States takes place. There are no inspections. There are processes of mutual evaluation. And these evaluations are part of an on-going process. After the plenary assembly of MONEYVAL – 2-6 of July – the report about the Holy See will be public. The draft of this report was first discussed in Strasbourg, during the meeting between Holy See officials and MONEYVAL evaluators in May. Some weaknesseshave been noted. But these weaknesses often deal with the fact that the Holy See is a peculiar State. MONEYVAL reports are divided in three parts: legal, financial and law enforcement. The evaluators rate the adherence to each GAFI recommendation (40+9 until February, now 40, with several novelties). Rating can be: non-compliant, partially compliant, largely compliant or compliant. Of the GAFI recommendations, 16 are «key and core». Of these 16 key and core recommendations, the Holy See – according to the press – would be partially compliant or non-compliant in 8. Obviously, this could change after discussionsat the plenary assembly. If it got 10 negative ratings, the evaluation of the Holy See adherence to international standards would be then assigned to the GAFI International Cooperation Review Group, and so it would take more time to be evaluated largely compliant. There are also infringement procedures on particular ratings. In 2005, Italy was evaluated generally largely compliant. At the same time, there were – in the Mutual Evaluation Report – several non compliant or partially compliant ratings. After two years, the GAFI closed the infringement procedure.

The meetings with the evaluators.

In fact, there is no intention to vote out a State. And the fact that there are 8 points to discuss does not necessarily lead to a general negative rating. The meetings with the MONEYVAL evaluators are characterized by an open discussion. The Holy See could eventually challenge the rating, and explain to the evaluators the reason for some of its peculiarities. The procedure is very well defined in several steps. During the plenary assembly of MONEYVAL, at least one whole day will be dedicated to discuss the draft report about the Holy See/Vatican City State. Three countries must canvass each of the three parts of the report. Then, the assembly as a whole will hold an open discussion. At the end of this discussion, the draft report could be amended. The final decision will be taken by all the delegates that will take part in the plenary assembly in July.

This will not lead directly to the Holy See being added to the white list. There is not a white list that is directly linked to the MONEYVAL evaluation. The white list generally refers to the Common Understanding – i.e. the criteria (defined by the EU. regulation 2005/60/EC) used by EU members about efforts against money laundering. A country is added to this white list only if sponsored by a member State, and only after getting a positive evaluation on its AML/FT (Anti Money Laundering/Financing of Terrorism) policies by an independent and authoritative international body. This white list is not perfect or definitive. For example, the list of virtuous countries published every year by the American Secretary of State follows a different approach. Another aspect of this white list is that States can acknowledge the European white list, and still consider a particular country not trustworthy. For example, Italy has excluded Switzerland from Italy’s white list.

Financial transparency is never ending

Even if MONEYVAL will positively rate the Holy See/Vatican City State, the path to transparency will not stop there. MONEYVAL has already done three evaluation rounds, and at this time some countries are being evaluated for a «follow up round», i.e. a fourth round that – beyond the implementation of specific GAFI recommendations – takes into consideration statistics and effectiveness of the legislation adopted by the member States. The first evaluation round took place in 1998-2000, the second in 2001-2004 and the third in 2005-2009. The Holy See became a MONEYVAL member on April 6^th 2011, and it was promptly admitted to the third evaluation round, that looks at the legislation of a country and the international  standards – for example, if the countries evaluated signed and ratified the Palermo and Wien conventions.

MONEYVAL on site visits to the Vatican

MONEYVAL evaluators went for the first time for an on site visit to the Vatican on November, 21-26. The evaluators assess the legislative situation of the countries incombating money laundering. The result of the visit is reserved to the counterpart: it is a report that shows the key findings of the evaluators and that rates the adherence of the country evaluated to each GAFI recommendation. After the completion of the report, the evaluated country has two months to implement the MONEYVAL recommendations.

On January, 25 2012, with the decree n. 59, the Holy See amended its anti-money laundering law n. 127, following MONEYVAL recommendations, and making it more compliant with international standards. That same day, the Holy See signed and ratified the conventions of New York, Wien and Palermo: this was proof of a long-term commitment to financial transparency. The new law was substantially different from the old one, and outlined a better power distribution. The control of Vatican finances was not exclusively entrusted to the one and only Authority for Financial Information. The amendment of the law was the focus of a strong internal debate, and some – in primis Card. Attilio Nicora, president of the Authority for Financial Information – defined the new law «a step back». In fact, the Holy See followed the MONEYVAL recommendations. Jeffrey Owens, head of tax issues at the Organization for Economic Cooperation and Development, praised the Holy See’s reforms. «The Vatican is heading in the right direction with the revised norms», he said to the Associated Press.

This amendment profoundly changed the Vatican legislative scenario. That is why there was the need for a second on site visit of MONEYVAL evaluators, that took place March 14 to 16 . This visit was not an inspection: it was an assessment of progress. After this second evaluation, the draft report was completed and sent out to the Holy See in April. In May – from the 14th to 16th – a delegation of the Holy See went to Strasbourg to comment on the report and get it ready to be presented to the next plenary assembly. Now, a pre-meeting will probably be held before the plenary assembly of July. And finally, the plenary assembly in July, where a decision will be taken: will the Vatican be subjected to an infringement process? Or will its efforts be awarded? « I have not seen any State – a MONEYVAL evaluator said informally to a Vatican official – going so quickly toward the financial transparency, and making so many changements». These words confirms the Strasbourg appreciation for the Holy See job. Neverthless the difficulties, one could also preview a positive MONEYVAL evaluation. And this would be gained in a very short time.

The two news are not directly linked, but they are both meaningful. And they show what is the direction the Holy See is heading to, thanks to the Benedict XVI’s «quiet revolution». And card. Bertone, Secretary of State, albeit in the midst of the storm, is bringing on Benedict XVI’s wills. Now it is the time for a more in depth analysis of the two «Vatican financial» news of the week.

The new regulation of the Prefecture for Economic Affairs

On March, the 9^th had come into effect the new regulation of the Prefecture for the Economic Affairs of the Holy See. The regulation had been published on February, the 22^nd and has been signed by the cardinal Tarcisio Bertone, Vatican Secretary of State. The regulation is – more than a little revolution – a way to keep pace with times and with the responsabilities of the Roman Curia, that is – it is written in the letter of presentation fo the new regulation by the prefect Giuseppe Versaldi – «one of the main instruments that the Holy Father has at his disposal» to act as a Pope.

Established by Paul VI in the 1967, the Prefecture for the Economic Affairs is entrusted with overseeing all the offices of the Holy See that manage finances, regardless of their degree of autonomy. It does not manage finances itself, but instead audits the balance sheets and budgets of the offices that do. It then prepares and publishes annually a general financial report. It must be consulted on all projects of major importance undertaken by the offices in question

It means that the Prefecture oversees all the dicasteries of the Roman Curia and of all the consolidate administrations, and the Vatican Radio, the Vatican Typography-L’Osservatore Romano publishing house, the Vatican Publishing House and the Vatican Tv Center. The Prefecture also oversees the balance sheets of Vatican City State.

In 34 articles, the text outlines the amplification of the competences of the Prefecture, that is the body «responsible for the economic address and program, as well as it is responsible to the vigilance and the control of the administrations of the Holy See». The change is considerable. Just take a look to the previous regulation – delivered November, 20^th 1999, where only «surveillance and control» were mentioned. So, the Prefecture can be now roughly compared to a Ministry of the Economy. The Prefecture – art. 2 of the new regulation – «prepares the document of economic planning in which are outlined all targets» that the administrations of the Holy See must jointly achieve. More: the document «periodically proposes the main macro-economical parameters» the administrations should refer to for their financial forecasting.

Which are the functions of the Prefecture for Economical Affairs? It prepares the annual reports, it carries out extraordinary administration acts and obviously it controls the annual statements. In the article 5 of the new regulation it is also mentioned the promotion of the «cooperation among the dicasteries, even through meetings, to jointly study, examine and evaluate relevant facts of administrative and financial management». This article of the new regulation recall, in some ways, what card. Bertone, Vatican secretary of State, underlined during the last meeting with heads of Vatican departments (Prefectures and Pontifical Councils). Bertone asked more coordination among the several branches of the Vatican curia, and also pointed at the encroach of the «passion for the little news of ecclesiastical gossip, that undermine the Holy See prestige and sometimes crab the climate of confidence and trust among the Holy See’s bodies».

The commitment to surveillance also includes the «analysis, in order to assure a precise and critical acquisition and preservation of the document with juridical relevance referred to any board». During the Papal Vacant See, the Prefecture is kept to give the final balanced and consolidated of the current year to the Cardinal Chamberlain.

One more step toward financial transparency

«Within the framework of the active co-operation between the Holy See and MONEYVAL (the Department of the Council of Europe which deals with the evaluation of systems adopted by member States to counter money-laundering), meetings of a technical nature were held in the Vatican between 14 and 16 March 2012». This is the beginning of the official press communiqué delivered at the end of the second on-site visits to the Holy See of the advisors of the Council of Europe. These visits are not inspections.

MONEYVAL advisors got back to the Vatican after their visit of the last 21-26 November. After their first visit, the Vatican law against money laundering – i.e. the Vatican law n. 127 of 2010 – has been improved and essentially re-written. The new text of the law has been promulgated by the President of the Governatorate of the Vatican City State with a Decree on January, the 25^th. The most important news is that the Holy See, by conforming its anti money laundering law to the international standards – «The Vatican is heading in the right direction with the revised norms», Jeffrey Owens,  head of tax issues at the Organization for Economic Cooperation and Development, said – seems to show to strongly tread the path to be enlisted in the group of the «virtuous» countries for what concerns the prevention and countering of money laundering and financing of terrorism.

This path is followed step by step by MONEYVAL advisors. At the end of the first on site visit, they explained in an official communiqué delivered on the web site of the European Body that «at the conclusion of its mission, the MONEYVAL team  shared and discussed its initial findings with representatives of the Holy See, after which initial views were exchanged». These impressions also dealt with the old text of the law n. 127: MONEYVAL advisors had not such positive impressions of the law, since it seemed to concentrate the warranty of the integrity of «Vatican finance » to the only Authority for Financial Information, without showing the will to truly involve all the Authorities concerned. Perhaps it is not a case that one of the main innovations of the new text of the law n. 127 is about the Authorities involved in the struggle against the money laundering and the financing of terrorism –  beyond the Authority for Financial Information, now the text also mentions the Secretary of State, the Pontifical Commission for the Vatican City State, the Vatican Gendarmes Corps.

The trend seems to be in favor of an involvement of the whole Vatican institutional framework, and at the same time in favor of more attention paid to the peculiarities of the Holy See and of the Vatican City State, as MONEYVAL advisors suggested. This effort also merited the appreciation of MONEYVAL advisors. «The meetings – it is written in the press communiqué – had been planned earlier, taking into account both the specific nature of the Holy See and of Vatican City State and the fact that this was the first evaluation of their respective legal systems. The meetings made it possible to continue gathering information on the steps taken thus far in the process of complying with international standards in the area of preventing and countering money-laundering and the financing of terrorism, such as the adoption of the Decree No. CLIX of 25 January 2012, replacing Law No. CXXVII of 30 December 2010, as well as the ratification of and adhesion to certain international Conventions pertinent to the question».

The conventions which the communiqué refers to are the  adhesion and ratification to the International Convention for the Suppression of the financing of terrorism (Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000), and the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998) –  this latter Convention already signed by the Holy See when it had been adopted by United Nations. It is highly meaningful that the adhesion and ratification to these Conventions had become official on January, the 25^th, the same day when the Decree of the President of Vatican Governatorate had been promulgated.

The path to the new law

In actuality, Vatican officials were already working to an improvement of the law n. 127, in full knowledge of the fact that the law had been written in hurry and under several pressures (among these pressures, two investigations promoted by the Rome Public Prosecutor: one about a money transfer from a IOR account deposited with a branch of UNICREDIT Bank in via della Conciliazione in Rome in 2009; and the seizure of 23 million euro transferred by the IOR from two accounts it had in Banca del Fucino and Credito Artigiano to another IOR account to a JpMorgan Bank branch in Frankfurt).  The same law n. 127 had to accomplish to the need to put into effect the Monetary Agreement between the Holy See and the European Union, signed in 2009.

It easy so easy to understand why the law n. 127 is important – even if some observers underlined that the law was particularly severe (especially for what concerned the introduction in the Vatican legislation of the auto-money laundering crime, while several legislation – Italian one included – does not contemplate this kind of crime). But there was also the need of a more in-depth reflection to accomplish the Vatican City State peculiarities, since in the Vatican there are no banks and no financial market.

Almost before the MONEYVAL advisors went to the Vatican for the first on site visits, the tops of the Holy See were thinking about how the Vatican could better adhere to the international standards. It was not only a technical problem, it was a problem to let the international standards in a peculiar reality as the Vatican is. This reflection brought to the improvement of the text of the law n. 127.

Who is against financial transparency?

Obviously, this brought to a lively debate within the Holy See officials. As the medias covered, among the opponents to the improvement of the law was the cardinal Nicora, president of the Authority for Financial Information. Nicora – as revealed by the Italian newspaper Il Fatto Quotidiano, that published a note written by card. Nicora – defined the new text of the law . 127 «a step behind» (this sentence had been highlighted several times in the commentaries about the so-called «Vatican finance»). In order to avoid a conflict of interests with the presidency of the Authority for Financial Information, Nicora resigned by the presidency of the APSA – the Administration for the Patrimony of the Apostolic See, a sort of «Central Bank» of the Holy See – but still holds his post within the Vigilance Commission of the Institute for Religious Works (which is under the surveillance of the Authority for Financial Information), within the Council of the Fifteen – a sort of “Little Parliament” made up by 15 cardinals that meet periodically to verify the correctness of “Vatican finance” – and also within the Pontifical Commission for the Vatican City State, that, according to the new text of the law n. 127, will be one of the actors that regulate the Authority for Financial Information.

According to the vaticanista Sandro Magister, even Ettore Gotti Tedeschi, president of the Council of Superintendency of the IOR, was against any intervention on the law n. 127. Gotti Tedeschi even feared the risk of an exam failure of the new text by MONEYVAL. Probably, Gotti Tedeschi – who still seats in the board of the Administration of the Cassa Depositi e prestiti – Loan & Deposit Saving, a public body controlled (with the 70 per cent of stocks) by the Italian Ministery of Economy, and this charge would in theory not tally with his Vatican charge as representative of a body of State – fears that his «image» of solver of the age-old Vatican financial obscurity could be delegitimized.  And this image is so important for him that – with an excess of diligence – he agreed to be questioned by the Italian magistrates, even if these latters did not submit the request internationally. Many commentators considered the Gotti Tedeschi’s one a «questionable decision», if not even damaging for the Holy see’s interests, since it could be read as a renounce to the immunity for the Central bodies of the Holy See.

Among the followers of the «step behind» -doctrine there was also the direction of the Authority of Financial Information. An e-mail of the director Francesco De Pasquale to Ettore Gotti Tedeschi had been leaked to the Italian newspaper Il Fatto Quotidiano. In the e-mail, De Pasquale unveil his adversity to the re-writing of the law n. 127. This e-mail also unveil an almost questionable relationship between the controller (De Pasquale) and the controlled (Gotti Tedeschi), also considering that the warranty of the integrity of «Vatican finance» had been depicted to reside in the Authority for Financial Information.

Waiting for July

MONEYVAL conclusions on the Holy See and  Vatican City State financial reliability will be delivered the next July at the plenary assembly of the body. This agenda has been agreed long time ago, and it never changed, as the official communiqué well let understand (one can there read that the meetings had been «planned earlier» and that the report «as scheduled» will be examined by the Plenary Assembly of MONEYVAL next July). There will be no eventual change of schedule for the drafting of the final report. One should not even be surprised by the comeback of the MONEYVAL advisors: all the European Countries had at least two, and sometimes even three rounds of evaluation, and this evaluations are about a long-time commitment of adherence to the international standards, and are not an exam about the financial transparency/not transparency to bring into an end within a few months.

Italian vision vs. European (and international) vision

The day after the MONEYVAL on site visit to the Vatican, the Italian newspaper Il Sole 24 Ore spread the news that a IOR account deposited with a branch of JpMorgan Bank in Milan had been closed because the IOR could not satisfy the requests of transparency. The article – very detailed, indeed – can be seen as a counterattack of the followers of the «Italian party». While the Holy See worked in order to accomplish the international standards of transparency, the propaganda on «Vatican obscure finance» rose up especially thanks to the investigations promoted by the Public Prosecutor of Rome and requested by the Unit for Financianl Information of the Bank of Italy. Is Italian State working to consider the Vatican something less than an enclave in the Italian territory? And did this interest toward the Vatican finance rise especially in Italy? And is the Authority for Financial Information itself a player that is playing is game in the field of Italy, and not in the field of the Holy See, that is working to strengthen its international appreciation and acknowledge?

Just take a look to the board of the Authority for Financial Service. Excepted Nicora, Dalla Torre and an internationalist jurist come from other charges within the Holy See, many members of the Authority for Financial Information – e.g. Francesco De Pasquale, Marcello Condemi – come from Italian banks and from the Bank of Italy, where they were not appointed in important charges. The composition of the board is not seen – by some insiders – coherent with the universality of the Holy See (whose employees are traditionally chose internationally) since the imbalance to Italy is considered a sign of weakness and source of risks, more than of opportunity, since the troubles of the Holy See came from a request of the Bank of Italy then headed by Mario Draghi (now president of the European Central Bank).

So, while Europe shows appreciation for the steps forward of the Holy See, on the Italian side the war of the «financial» leaks just began. The news of the closing of a IOR account is probably just a first signal.

There was not just law “n. 127 question”. In the last meeting with heads of Vatican departments (Prefectures and Pontifical Councils), Bertone asked more coordination among the several branches of the Vatican curia. He also pointed at the encroach of the «passion for the little news of ecclesiastical gossip, that undermine the Holy See prestige and sometimes crab the climate of confidence and trust among the Holy See’s bodies». The Pope presided the meeting, and he agreed with each word of his Secretary of State. In 2009 – in his letter to the bishops of Catholic Church concerning the remission of the excommunication of the four bishops consecrated by Archbishop Lefevbre – the Pope quoted this paragraph from Galatians 5:13-15: «Do not use your freedom as an opportunity for the flesh, but through love be servants of one another. For the whole law is fulfilled in one word: ‘You shall love your neighbour as yourself’. But if you bite and devour one another, take heed that you are not consumed by one another».

There has been some «bite and devour» against Bertone, too. Since he has been appointed as Secretary of State, the attacks against him had been continuous. Before Bertone turned 75, several influential cardinals had asked Pope Benedict to make a change in Secretariat of State, because of problems with curial government and the lack of coordination that had taken place. Now that he turned 77, many observers spread the voice that there should be a change of leadership in the control room of the Roman Curia.

Benedict XVI and Bertone are following the same footsteps. Step by step, they are changing the Vatican approach. Not casually, Benedict XVI wanted an expert of Canon Law as Secretary of State, and not a diplomat. This choice was not well taken by diplomats and his protégés, that increased their influence under the former Secretary of State, cardinal Angelo Sodano. But it is part of a long-sighted project of Benedict XVI. The Secretary of State must not necessarily come from the diplomatic service. His function is to «provide close assistance to the Supreme Pontiff in the exercise of his supreme office», and  this close assistance does not deal just with diplomatic relationships. For example – according to Pastor Bonus pastoral constitution – the Secretariat of State must «draw up and dispatch apostolic constitutions, decretal letters, apostolic letters, epistles, and other documents entrusted to it by the Supreme Pontiff».

An expert of Canon law –  and Bertone is – could better coordinate the drawing of documents. The Pope himself – in the 2010 letter to the Catholics of Ireland – wrote that  «the program of renewal proposed by the Second Vatican Council was sometimes misinterpreted and indeed, in the light of the profound social changes that were taking place, it was far from easy to know how best to implement it. In particular, there was a well-intentioned but misguided tendency to avoid penal approaches to canonically irregular situations». Turning back to the solidity of law, to remember Christian roots and to turn back to God. This seems to be the Benedict XVI’s plan for the universal Church, as the next Consistory would show.

So, attacking Bertone means attacking Benedict XVI. Was that a case, some insider questions, that the strongest attacks against Bertone leadership – the Viganò’s scandal and the consistory itself – came right when the Holy See was strengthening is international impact?  Who wants to undermine Holy See international impact? In fact, in those days Holy See rewrote its 2010 anti-money laundering law, the Vatican law n. 127. It is important to see what the new law really is about, going beyond the possible «bite and devour strategy». It was maybe to prevent that strategy that Holy See made no major announcement of the revision, while the Vatican’s foreign minister, Archbishop Dominique Mamberti, referred obliquely to it in an article Friday in the Vatican newspaper L’Osservatore Romano. This is probably also the reason why the law come into effect with an urgent decree, to be ratified by the Pontifical Commission of Vatican City State within 90 days.

The first point of the new Vatican law n. 127 is about financial transparency; the law acknowledges the right to privacy, and at the same time shed the obscurantist myth of Vatican secrecy. In fact, the Vatican law n. 127 aims to protect the right to privacy acknowledged in all the civil countries – the right to privacy is even mentioned in Gaudium et Spes, one of the Constitutions of the Second Vatican Council  – and at the same time it aims to favor the international exchange of financial information.

Why did the Vatican modify the law just one year after its introduction? In fact, the law n. 127 had been written in haste because of several reasons. One of this reasons was the need to solve the «IOR case», that is the seizure – ordered by Italian magistrates – of 23 million euro transferred by the IOR from an account it owned to the Credito Artigiano toward Jp Morgan (20 million) and Banca del Fucino (3 million). Another reason was the need to bring into effect the Monetary Convention with European Union signed in 2009.

It was not downhill to the Monetary Convention. Since February 2009, Vatican and European Commission advisors (Italy was part of the table as observer) start up the job to define the new monetary agreement. European Union conditions immediately seemed too restrictive. The relationship between Holy See and European Union were fraught. Vatican had the will to keep its autonomy, and Mons. Carlo Maria Viganò, then secretary of the Governatory of the State of Vatican City, even proposed to unhook Holy See from the Euro area, in order to let the Holy See avoid to be subjected to too restrictive conditions. Someone also proposed not to close the agreement within the year 2009, and to postpone the closure of the agreement to 2010. But time is short, and hierarchies of the Holy See did not take in consideration both of the hypothesis. The monetary agreement was finally signed on December, 17th 2009. Joaquin Almunia, Europen commissioner for Economical and Monetary Affairs, and mons. André Dupuy, Apostolic Nuncio to the European Union should sign together. But Almunia refuses to sign the agreement in the same room with the pontifical representant, and so Dupuy and Almunia sign the agreement each one in their own office.

Even inside the Vatican, things went on quickly. The Vatican Law n. 127 is adopted and it is decided to extend the effects of the new regulations to the Holy See via a motu proprio by Benedict XVI. The Motu Proprio is released the 30th of December 2010, right in time not to let the agreement lapse. According to some Vatican insiders, the institution of the Authority for Financial Information would mean that the same Ettore Gotti Tedeschi, president of the Commission of Vigilance of the I.O.R., is not given a blank cheque by the Pope, since the I.O.R. itself is subjected to monitoring. This is even truer for what concerns the new law: Jeffrey Lena, the Vatican’s U.S. attorney, noted for example that the new law allows for the IOR itself to be sanctioned up to €2 million if it violates the law — and it also allows for the IOR to have recourse to the Vatican’s court system to appeal.

Modifications of the law – promoted by the Vatican Secretariat of State and the Pontifical Commission of Vatican City State – seem to mean that the new law is not merely «a slap on the face» for some contingent problem. Holy See is going to meet the international standards, and it does not seem to be an occasional concurrency that the same day the implementation of law n. 127 came into effect with an urgent regulations, Holy See announced the ratification of three international agreements. Holy See adhered to and ratified the International Convention for the Suppression of the financing of terrorism (Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000). Holy See also announced the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998): this latter Convention had been already signed by the Holy See when it had been adopted by United Nations.

It was January, 25th. During those days, medias highlighted Vigano’s scandal, depicting it in the terms that Vatican could be considered a multinational company whose seat is in Italy. Some days later, a confidential memo on IOR-Aif (Authority for Financial Information) relationships had been leaked to the press. This memo was equivocally a blight on the Vatican transparency toward Italian authorities.

Anyway, the IOR case emphasized almost an excess of diligence by Ettore Gotti Tedeschi, president of the Supervisory Commission of the IOR. Gotti Tedeschi agreed to be questioned by the Italian magistrates, even if these latters did not submit the request internationally. Many Vatican insiders considered the Gotti Tedeschi’s one a «questionable decision». It is because this decision seems to be a renounce to the immunity by Gotti Tedeschi, and this renounce to immunity could be eventually extended to the body of State he presides.

It is important to say that it is not only an Italian-Vatican matter. The improval of the Vatican law n. 127 bodes to a long-sighted choice. In fact, Jeffrey Owens, head of tax issues at the Organization for Economic Cooperation and Development which maintains the «white list» of the virtuous State in countering money laundering, said to Associated Press that the Vatican is heading in the right direction with the revised norms. «What I see in these developments – Owens said – is that the Vatican has recognized that in today’s financial environment there is a premium on transparency and that to achieve this, this must conform to the highest international standards, whether in the area of money laundering, tax evasion or bribery».

If the «old» law n. 127 had been written in haste, the «new» law shows that Holy See means business on contrasting money laundering. After just one year, Holy See changes his law as requested by  MONEYVAL Adivsors, come for an on-site visit in the Vatican the last November. The advisors noted inadequacies in the Vatican legislation. According to MONEYVAL official communiqué,  «at the conclusion of its mission, the MONEYVAL team  shared and discussed its initial findings with representatives of the Holy See, after which initial views were exchanged». Of these inadequacies, the Holy See was aware. The common references are the 40+9 GAFI recommendations – references that every country should follow.

There are substantial news. For example, the “old” law n. 127 gave the power to supervise and contrast the  money laundering to one only authority, the Authority for Financial Information – established via Motu Proprio by Benedict XVI in 2010. The “new” law fairly share the power among other authorities, that are the Vatican Secretariat of State, the Pontifical Commission of the Governatorate of Vatican City State, the Authority for Financial Information, and also the Vatican Gendarme Corps. This technicality confirms the long-sighted Vatican policy. Jurisdictions are called – coherently to the principle of rule of law – to involve all their institutions, thus competent authorities must follow the same rigour and transparency policy in order to prevent and countering money laundering and financing terrorism.

It is interesting to see that Holy See met the challenge to adequate to International standards without denaturalizing their institutions. In Vatican City State, in fact, there is no market and there are no banks. According to the Italian Supreme Court, IOR is «a central body of the Church», that is a governmental body that does not aim to distribute assets.

One example of the effort of the Holy See is the procedures to take into consideration the list of terror organizations issued by the Security Council of United Nations. According to the law n. 127, Holy See does not mechanically transpose the United Nations Lists. This choice is aimed to preserve the Holy See and Vatican neutrality. In fact, lists are written under the «Chapter 7» of Charter of the United Nations, and that Chapter is applied in war time. Holy See could be embarrassed by a mechanical transposition of the lists, since it could be in contradiction with the Holy See orientation –  Holy See is neutral and in favor of peace. Since Holy See is Permanent Observer to the Assembly of United Nations, and not a Full Member, a settlement has been made to the autonomy of the Holy See: the Vatican Secretariat of State – according to the new article 24 of the law n. 127– will create its own list of terror organizations based on the one issued by the United Nations, so keeping its autonomy, and at the same time showing to be sensitive to the international security goals.

Some superficial observer would think that Holy See is not working seriously. It is not true. Holy See is working seriously, and not to respond to internal problems, or to answer to European or Italian claims. More probably, Holy See wants to give its contribution to achieve strategic goals as the countering to money laundering and to international terrorism financing.

After adopting the new law, the Holy See began a complex path to adequate to the international standard, according to GAFI (Financial Action Task Force) recommendations. This path would finally lead the Holy See to be enrolled in the «White List», the list of states most active in preventing and fighting the financial crimes.. In november, advisors of the Council of Europe made an on-the-spot investigation in Vatican. The news was not widely covered by the medias, and it did not seem to interest analysts and public opinion.

Still, the motu proprio delivered one year ago signed the change of an era. Before it, Vatican did not have an Authority of Financial Information. Before it, Vatican boundaries were just with Italy, and monetary agreements were to be signed just with Italy. Vatican Lira (the coin issuanced before euro) was not the international lira, but Italian lira. The entrance in the European Union changed everything. The changes did not deal just with the Vatican. But the changes dealing with the Vatican had been widely covered by medias, mainly focusing on the I.O.R. issue. This interest letted show – according to some Vatican insiders – other kind of goals, as – for example – the attack to the sovereignty of Vatican City State, in order to undermine the diplomatic importance of the Holy See.

Let us make a step back in time. February 2009: European Commission communicates that the Monetary Agreements with Monaco, San Marino and the Vatican are to be reviewed. If the three countries wants to remain hooked to the European Monetary System, they need to uniform to European norms and procedures, peculiarly for what concerns the countering of money laundering and of financial aids to terrorism.  The European Commission also asked to introduce a new uniform method for calculating the ceilings of euro coins issuance of the three countries and any country that would sign a Monetary Agreement with the Community in the future. In order to reach the objectives of the revisions, ad hoc bilateral commissions had been established.

Since February 2009, Vatican and European Commission advisors (Italy is part of the table as observer) start up the job to define the new monetary agreement. European Union conditions immediately seem to restrictive. The relationship between Holy See and European Union are fraught. Vatican has the will to keep its autonomy, and so every single point of the agreement needs to be discussed and weighed up. But time is short. Mons. Carlo Maria Viganò, then secretary of the Governatory of the State of Vatican City, even proposed to unhook Holy See from the Euro area, in order to let the Holy See avoid to be subjected to too restrictive conditions. In some ways, it was a prophetic idea, considering the state-of-the-art of euro area and the choice of some countries – e.g. Great Britain – to keep out from the euro area. Someone also propose not to close the agreement within the year 2009, and to postpone the closure of the agreement to 2010. Hierarchies of the Holy See did not take in consideration both of the hypothesis. The costs would be so high, both for political and economical reasons. A postponing would bring – for example – to a suspension of the coins issuance and stamps issuance, which are among the most important incomes of Vatican City State. It is too complicated.

The monetary agreement is finally signed on December, 17th 2009. It is a day full of tensions. The monetary agreement would be signed contextually by Joaquin Almunia, Europen commissioner for Economical and Monetary Affairs, and mons. André Dupuy, Apostolic Nuncio to the European Union. Almunia refuse to sign the agreement in the same room with the pontifical representant, and so Dupuy and Almunia sign the agreement each one in their own office. Almunia fairly slight the Holy See, also because of the fraught relationships between the Spanish Socialists and Catholic Church. The same Almunia, once he will be appointed as European Commissioner for Concurrency, will start the procedure against the Italian State for favoritism toward the Church because of a special fiscal regime – in fact the fiscal regime enjoyed in Italy by Churches that signed a Concordat with Italian State.
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Inside the Vatican, things goes on quickly, even because time is short. The Vatican Law 127 is adopted and it is decided to extend the effects of the new regulations to the Holy See via a motu proprio by Benedict XVI. The Motu Proprio is released the 30th of December 2010, right in time not to let the agreement lapse. According to some Vatican insiders, the institution of the Authority for Financial Information would mean that the same Ettore Gotti Tedeschi, president of the Commission of Vigilance of the I.O.R., is not given a blank cheque by the Pope, since the I.O.R. itself is subjected to monitoring.

But it is not downhill from there. In September 2010, two money transfers of the I.O.R. are subjected to preventive seizure for a suspected  violations of the norms against money laundering. I.O.R. moved money from an account it owned toward the Credito Artigiano ,a «friend bank», whose president, Antonio De Censi, seated in the Commission of Vigilance of the I.O.R. The I.O.R. ordered Credito Artigiano to make two transfers with the money in that same account: one of 3 million to an account at Banca del Fucino in Rome, and another of 20 million to a JP Morgan account in Frankfurt. Both the account were owned by the I.O.R.

The Banca d’Italia (Bank of Italy) demanded detailed information on the ownership of the accounts of the I.O.R. and the recipients of the transactions, but all the explanations are considered not sufficient. The money are seized, waiting for further investigations. They will be un-seized just when the Vatican counter money laundering regulations has come into effect.

In the meantime, Ettore Gotti Tedeschi – taking an  unprecedent and (according to many insiders) questionable decision – agreed to be questioned by the magistrates of Rome, and is questioned in the offices of the public prosecutor in Rome. His deposition filled 91 pages of transcripts. In it, he explained his action as «a demonstration of the desire to comply with a new era», and he also explained why and how the transfer took places. The magistrates did not deem satisfactory the clarifications given.  Gotti Tedeschi’s deposition created a disagreeable precedent in the diplomatic relationships between Holy See and Italy: if Holy See is a sovereign country, magistrates of a foreign country – Italian ones included – must submit a request internationally,forwarding the request through diplomatic channels to the Holy See as a foreign state, to question one of its employees. More. The president of the body of a country cannot be questioned from a judicial authority of another country but renouncing his immunity. Otherwise, his personal choice would imply to the a de facto demission to the immunity of the body itself. Gotti Tedeschi’s choice is something incomprehensible in terms of international relations.

This is one of the topics in discussion within the Authority for Financial Information, headed by card. Attilio Nicora (former president of the A.P.S.A., a sort of “central bank” of the Vatican) and leaded by a directive council that enlists among his members Giuseppe Dalla Torre, one of the most authoritative and trusted people of the Holy See. Excepted Nicora, Dalla Torre and an internationalist jurist come from other charges within the Holy See, many members of the Authority for Financial Information come from Italian banks and from Bank of Italy, where they were not appointed in important charges. Is the composition of the board coherent with the universality of the Holy See, whose employees are traditionally chose internationally? The imbalance to Italy is considered by many Vatican insiders a sign of weakness and source of risks, more than of opportunity, since the troubles of the Holy See came from a request of the Bank of Italy headed by Mario Draghi (now president of the European Central Bank).

On September, 14th 2011, Holy See delivered to European Union a preliminary paper, in order to illustrate the normative and institutional framework of the Holy See and of Vatican City State, and to explain the initiatives issued to adequate the regulations to the international standards. At the end of November, the advisors of the European Council made an on-the-spot investigation. Contrary to expectations – maybe especially to Bank of Italy’s expectations – it seems that the I.O.R. has been found healthy regarding international standards.

At the half of 2012, MoneyVal – the body of the Council of Europe that ensure that its member states have in place effective systems to counter money laundering and terrorist financing and comply with the relevant international standards in these fields – will discuss the report on the Holy See and on the State of Vatican City. In the meantime, the reformation of Vatican finance is intensively in progress. The game is not yet over, and no one knows how it will end.

On September 6, the I.O.R. ordered Credito Artigiano to make two money transfers from an account of the I.O.R. deposited with the Italian bank: one of 3 million to an account at Banca del Fucino in Rome, and another of 20 million to a JP Morgan account in Frankfurt. Both of the recipients were identified only by their IBAN codes. On September 15, the office of financial information at Bankitalia notified Roman authorities about a possible violation by the IOR of the norms against money laundering. On September 20, the court of Rome ordered the preventive seizure of the entire sum deposited in the account of the IOR, and issued two notices of investigation of the president and director general of the Vatican bank, for omission of procedures against money laundering. The money are frozen, the I.O.R. is in the storm.

One year before, in September 2009, Rome Public Prosecutor investigated on money transfer o fan I.O.R. account deposited with a branch of Unicredit Bank based in via della Conciliazione, close to Saint Peter Church. The investigation led nowhere, but it was a signal that the “bank of the Vatican”, had more difficulties than in the past to make money transfers.

In fact, the I.O.R. is not a “true” bank, and it deposits accounts with branches of several banks all over the world to make money transfers. There are some privileged relationships, e.g. the ones with the Jp Morgan Bank and Unicredit. Since the last investigation, Unicredit strengthen the regulation, and asked to specify in a fairer way from who and why the money are deposited or moved in the account and to clarify even the bank check movements. Is the proverbial Vatican bank privateness going to collapse?

Many worried about the possible collapse of the Vatican privateness when  Ettore Gotti Tedeschi, president of the I.O.R., together with Roberto Cipriani, general director of the bank, agreed to be questioned by the magistrates of Rome. Their deposition filled 91 pages of transcripts, portions of which were leaked to the press.

It was a level of cooperation unprecedented in the history of the Vatican bank. In 1993, when he was called for questioning by the magistrature of Milan, Angelo Caloia, at the time  president of the I.O.R. , got the magistrates to submit a request internationally, with the request forwarded through diplomatic channels to the Holy See as a foreign state.  At that point, the I.O.R, responded with a written deposition, also forwarded through diplomatic channels. It delivered the proof of malfeasance – concerning Enimont “payoffs” of about 45 million euros – and received general approval in the press for having cooperated with the legal system. But his spontaneous deposition, Gotti Tedeschi did not succeed his goal, since the magistrates did not deem satisfactory the clarifications given, and responded “no” to the request to release the confiscated 23 million euros.

The goal had been reached with the the law no. 127 of the Vatican State, that adopts four new laws in implementation of the monetary convention – among the ones the Law concerning the prevention and countering of money laundering and of the financing of terrorism – and that regulates the competences of the Authority for Financial Information.

The president of the Authority for Financial information is the Cardinal Attilio Nicora, who also remains president of the Administration of the Patrimony of the Apostolic See. Among the members of the board, there are Marcello Condemi and Giuseppe Dalla Torre. Condemi was the deus ex machina of the new Vatican legislation against money laundering, while Dalla Torre represents the “Vatican” branch inside the Authority, since he is also president of the Court of the Vatican State. The members of the board have the job to give an international warranty to the transparency of the Ior operation, by storing all the money transfer of the I.O.R. in an archive, in order to be able to control each money transfer operation in the bank. Right after the 23 million euro had been confiscated, the I.O.R. – whose accounts are attributed by codes, and not by names – asked his current account holder to fill a detailed schedule to bank more than 10,000 euros. This request has been formalized by the law no. 127. There are problems to apply this law, indeed. If a I.O.R. account holder  directs with an overnight bag to the Torrione Niccolò V – where the bank is based – the Vatican guards would eventually ask him if there is something to declare. But if this account holder declares that he is waited from a cardinal, and that he is bringing to him that overnight bag, no one would stop him at the customs house. Who can be sure that the cardinal who received the overnight bag goes afterward to the I.O.R. to bank the money?

These kind of problems has still not been solved. But the only presence of the law satisfied Italian magistrates, who revoked the seize of 23 million euros. The Holy See made an official statement, underlining its satisfaction, but Ettori Gotti Tedeschi did not. In fact, the new law his not part of the job of his administration, but it is a step a in process toward the I.O.R. transparency whose origins dates before Ettori Gotti Tedeschi presidency, and drove by the A.P.S.A.

Yet, in the past months, trying to un-seize the 23 million, Gotti Tedeschi spoke several times about the “23 million issue”, claiming that the Vatican bank glasnost began under his administration. And a “deep throat” told to Corriere della Sera, the main Italian news daily, that «in ten months, more has been done than in twenty years, there are decades of habits to be changed»: this statement has given flesh and bones to the black legend according to which the legal troubles of the current president of the IOR, Gotti Tedeschi, in office since September 23, 2009, can be attributed to the mismanagement of his predecessor Angelo Caloia, in office during the previous twenty years. Gotti Tedeschi insists that he never said or thought this, while Caloia has demanded that the Vatican secretariat of state make public reparation for the affront, or – at least – to have the opportunity to write an article for the Osservatore Romano.

On march, 12, 2011, Caloia would eventually ended the fouth five year-term as president of the Bank of the Vatican. It was replaced by Ettore Gotti Tedeschi in 2009, but he had already been victim of manoeuvres to be sostituted. In 1999, Hans Tietmeyer, former president of Deutsche Bank, was backed as new president of the I.O.R. from the “old guard” of Vatican Curia. At a conference given by Tietmeyer at the Pontifical Academy of Sciences, Caloia stood up to criticize his ultraliberal theses. The Holy See did agree with Angelo Caloia.

And Holy See still agrees, if one reads the Benedict XVI’s encyclical Caritas in Veritate. But, on the other hand, the new president of the I.O.R. is a staunch proponent of a capitalism inspired by Christianity. Gotti Tedeschi is so ultraliberal to have signed, in 2007, a manifesto in 13 points, spearheaded by the former secretary of the highly secularist radical party, Daniele Capezzone. The manifesto proposed a single 20 percent “flat tax,” presidential government according to the American or French model, tax credits for health care and education, the requirement that the public administrator pay for all damages incurred, the changing of the retirement age to 65, tax exemption for overtime work, the abolition of professional associations and of the legal status of study certificates. When the Caritas in Veritate sketches were ready, Gotti Tedeschi – who was still not president of the I.O.R. – were writing articles on the Osservatore Romano about the creation of “a new economic bubble” to save the economy, and about the need to found a good bank to finance the developing countries – this latter proposal backed from the then British Prime Minister Gordon Brown. Then, Gotti Tedeschi gave his contribution in writing Caritas in Veritate, and now he brings out in several conferences the parts of the encyclical he agrees with, which are the parts considered more in continuity with the John Paul II encyclical Centesimus Annus. Centesimus Annus has never been seriously accepted by the hierarchy or by Catholics as a whole. It has been judged as too friendly toward the capitalist system.  Gotti Tedeschi, on the other hand, considers Centesimus Annus so important to launch the proposal to candidate John Paul II to the Nobel Prize for Economy.

What is the position of the Church? It is sufficient reading a Joseph Ratzinger conference of 1985, when he wrote that «the well-known remark made by Theodore Roosevelt in 1912: “I believe that the assimilation of the Latin-American countries to the United States will be long and difficult as long as these countries remain Catholic.” Along the same lines, in a lecture in Rome in 1969, Rockefeller recommended replacing the Catholics there with other Christians  — an undertaking which, as is well known, is in full swing. In both these remarks, religion — here a Christian denomination — is presupposed as a socio-political, and hence as an economic-political factor, which is fundamental for the development of political structures and economic possibilities».

Ratzinger quoted these theories to criticize them, and this is still is position. Religion is part of integral human development, that  passes through economy, but – firstly – from the human integrity. A “good bank” would not be sufficient. And the I.O.R. does not become a good bank filled with ethics just by changing the legislation. I.O.R. is going to became a “true” international bank. But its privateness criteria will eventually be similar to the Switzerland ones.